This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
Trade Parameters
Observations – For
Observations – Against
RBS shares show signs of wanting to reverse after 13% sell-off from May highs. Yesterday broker Morgan Stanley suggested that RBS could be to set to pay out at least 100% of its earnings to shareholders in 2019 and 2020 (best in Europe), providing it passes Bank of England stress tests, via ordinary dividends, special dividends and a £2bn share buyback. The bank is steadily returning to profit via careful restructuring.
Note that the government is still selling down its RBS bailout stake (now 62.4% from 70.1%). This means a forced seller and thus an overhang for the shares which, along with the absence of dividend, could hamper the shares price recovery. Restructuring continues, which can be expensive, as do legacy legal costs for things like pre-financial crisis mis-selling.
Consensus is bullish with 44% of brokers suggesting Buy, 48% advocating Hold and only 8% saying Sell. Note that the consensus target price of 312p is beyond our short term objective or revisiting May highs. A share price bounce could encourage some of the Neutrals to upgrade, giving the shares momentum, especially as 100% of broker targets suggest upside from current levels.
Next Event: Q2 results, 3 Aug
Latest Broker 12-Month Consensus: 44% Buy, 48% Hold, 8% Sell (full breakdown on request)
Source: DowJones Newswires, Reuters News, Bloomberg or Company Press releases
| Share | 1wk | 1m | 3m | 6m | 1yr | 2yr | 3yr | 4yr | 5yr |
| Perf % | -1.9 | -10.2 | 1.2 | -6.0 | 4.2 | 17.3 | -25.5 | -23.0 | -18.4 |
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